Money Management

It’s not so easy being self-employed. But you can take steps to work through the challenges you encounter. 

Some people make the decision to go freelance because they want more flexibility. Others do it because they find that they’re able to increase their income by venturing out on their own.

No matter your reason for going freelance, you may find that it poses its share of benefits as well as challenges. And if you’re struggling with the latter, you’re by no means alone. In a recent Everly survey, these were the biggest challenges freelancers are facing.

1. Difficulty building in vacation time

A good 42% of freelancers say working in vacation time is tough. That’s understandable, because freelancers don’t get paid time off. One option, however, is to put money into your savings account every week for vacation purposes. And that sum should be enough to cover not only the cost of a trip, but also, the cost of not earning any income for a week or so.

2. Clients who don’t always pay or pay on time

For 40% of freelancers, clients who are late with payments or don’t pay regularly are a problem, and understandably so. After all, you have bills to pay. And you can’t just tell your credit card company “sorry, my client paid late” and expect to be let off the hook with regard to things like interest. One solution, however, is to start asking for upfront deposits, and then payments at different intervals instead of at the end of a project. That way, you’re assured that some money is coming in while you do your work.

3. Paying for health benefits

Health insurance can be very expensive when you have to pay for it in full on your own, so it’s easy to see why 38% of freelancers cite this as a major challenge. But it does pay to shop around for health insurance every year during open enrollment for marketplace plans, because you may find that your needs and costs can change from year to year.

4. Difficulty finding regular gigs

A good 37% of freelance workers say they struggle to find regular gigs. One option is to offer discounted rates to clients who use your services regularly. That might incentivize them to give you a reliable stream of work. And also, don’t hesitate to ask satisfied clients to refer you to others. You can even consider rewarding them for helping you drum up more business.

5. Doing taxes

Many people have a hard time tackling their tax returns. But it’s not shocking to hear that 36% of freelancers struggle with this necessary but potentially painful task. When you work freelance, you have to keep precise records and know what expenses you’re eligible to write off. It pays to hire an accountant for tax help. That investment could pay off in the form of tax savings and minimized stress.

6. Feelings of isolation

When you work freelance, you often lose the camaraderie of office life. And not surprisingly, 34% of freelancers struggle with feelings of isolation. If you have the same challenge, force yourself to work outside your home. Find a coffee shop to work from twice a week, or look into renting co-working space if the cost isn’t prohibitive. And if it’s not feasible to work from anywhere other than your home office, at least try to keep your social calendar active, whether by attending professional networking events, volunteering, or spending time with friends.

Being a freelancer isn’t always smooth sailing. While these challenges may be fairly common, the good news is that they’re all solvable in their own right.

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Find out how you can still claim a generous tax credit, even if it will be a little smaller. 

COVID-19 relief legislation provided much-needed funds for households across America. The American Rescue Plan Act, in particular, offered $1,400 checks to all eligible adults and dependents and provided parents with even more generous payments worth up to $3,600 for children under the age of 6 or up to $3,000 for those aged 6 to 17.

These payments were for the 2021 tax year, though — and it’s now the end of 2022 and no additional large payments have been authorized on the federal level to be deposited into American’s bank accounts this year.

While the $3,600 payments will not be happening, the IRS has indicated in a news release that up to $2,000 could still be on offer to parents who qualify for some extra financial help. Here’s why.

The IRS says this credit is smaller, but still an option

In a December news release from the IRS intended to help people get ready for tax season, the IRS indicated many people could get less money this year because of the COVID-19-related tax code changes coming to an end.

Among the changes the IRS discussed, one of the most important was the end of the expanded Child Tax Credit. It was this expanded credit that entitled parents to between $3,000 and $3,600 per eligible child.

With many American parents struggling due to the effects of inflation, the end of this credit is a big blow. But, the good news is, the IRS has made clear that many parents will still be eligible for payments of up to $2,000 for the 2022 tax year.

These $2,000 payments are an option for families because a Child Tax Credit existed before the COVID-19 relief bills. Qualifying parents could claim a credit of up to $2,000 when they filed their tax returns each year — a total of $1,400 of which is refundable. The American Rescue Plan Act tweaked and changed this existing credit to make it larger, provide some of the money upfront, and make the entire credit refundable.

The end of the expanded credit didn’t alter the existing one, though, as the IRS points out — so a payment of up to $2,000 per child can still be claimed when filing 2022 returns.

Make sure to get your $2,000 from the IRS

If you are eligible for this credit, you must file a tax return to claim it. The IRS will begin accepting returns in late January, so take action to get your money ASAP so you can use it to pad your savings account or cope with the rising costs families have endured this year.

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What’s the deal with pet insurance not covering required vaccines? 

Pet owners are likely well aware that their companion animals need many different annual vaccines. Some of these, like the rabies shot, are required by law. And others are recommended in order to help keep animals safe from common diseases that could be deadly.

Owners may be surprised, however, to find that most pet insurance policies do not cover these vaccines. That means they’ll have to pay for them with a credit card or out of a bank account with no reimbursement.

Here’s why that’s the case.

Pet insurance plans work differently than human insurance

Sometimes, people expect pet insurance to cover vaccines because they compare it to human health insurance.

Typically, human health insurance is really good at covering preventive care — including vaccines like the COVID-19 shot or flu shots. In fact, under the Patient Protection and Affordable Care Act (better known as Obamacare), most health insurance plans are actually required to cover a wide range of immunizations.

Pet health insurance is not subject to these regulations, though. And typically, pet health insurance does not cover preventive care or vaccines, and instead expressly excludes these types of expenses.

Vaccines and routine exams are considered “wellness care,” while the standard pet insurance policy generally limits coverage to accidents and injuries. The policies are there if pets fall ill and need treatment, but they are not there to pay for everything a companion animal needs — including vaccines designed to keep pets healthy.

Getting used to this big shift from human health insurance may be hard for some pet owners, but it’s important to know the rules upfront before getting covered so there are no unpleasant surprises later. Even after buying a policy and paying premiums, owners will need to budget for routine annual exams, vaccines, and other health services not related to treating problems.

Is it possible to get vaccines covered?

While a typical pet insurance policy is not going to pay for vaccines that animals require, owners may have the option to buy coverage that will offer this type of protection.

A number of pet health insurance providers offer a wellness rider, or wellness add-on, to accident and injury plans. If owners choose to add wellness coverage, they will pay extra premiums in exchange for supplementary coverage in addition to their accident and illness plans.

Add-on wellness plans should cover vaccines, exams, and more. They can provide the predictability of knowing that insurance is going to pay for vet bills even when an animal is not facing serious health issues.

It’s important, though, for owners to read the fine print of these policies, fully understand exactly what they cover, and make sure they provide enough value to be worthwhile. In many situations, the added premiums are substantial and the coverage is limited, so wellness plans are often not worth the money being charged for them.

Instead of springing for wellness coverage, owners may instead want to just save the added money they would have paid for premiums and add it to a special savings account where they put money earmarked for covering predictable veterinary costs throughout the year. This can be a better value and it’s easy to do, since the costs of vaccines won’t usually come as a surprise.

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The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

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If you’re not sure what stagflation is or whether we should be worried, read on. 

The ugly prospect of stagflation is on the minds of many institutional investors right now. In the 2023 Natixis Outlook Survey, which asked over 500 institutional investors about their outlook for next year, almost two-thirds said they think stagflation is a bigger risk than a recession. Find out more about what stagflation is and how worried we should be.

What is stagflation?

Stagflation combines the words inflation and stagnation. The reason fund managers and other institutional investors are worried is that it’s the worst of all worlds, economically speaking. Periods of stagflation usually involve high inflation, high unemployment, and slow economic growth. Not only could prices continue to rise, but people might also lose their jobs as the economy slows.

It’s worth knowing that stagflation is rare — the only time it’s really happened in U.S. history was back in the 1970s. The issue is that several economists and leaders, including the World Bank, think there could be parallels between what’s happening now and what happened fifty years ago.

How worried should we be?

One reason institutional investors are particularly worried is that stagflation is difficult to handle and if it sets in, it can last longer than a recession. If it comes about, it will be challenging. All the same, just because something is a bigger concern that doesn’t mean it’s more likely to happen.

The issue is that if inflation continues to increase and if there’s a crossover with an economic decline, we could enter stagflation territory. But those are big ifs. Indeed, we don’t even know for sure whether we’ll hit a recession, never mind stagflation. The economic fallout from the pandemic slowdown and related stimulus measures has sent a lot of indicators topsy-turvy. And even in relatively normal times, economists often don’t agree.

The Federal Reserve is increasing interest rates in an attempt to get inflation under control. Part of the reason there’s so much uncertainty is that it takes time for the impact of rate hikes to show in the wider economy. We know that things will slow in 2023, but we don’t yet know by how much, nor whether it will trigger a recession.

How you can prepare for stagflation

The headlines are full of potential doom and gloom next year, but there’s not a lot that regular Americans can do to stop whatever might unfold. The best antidote for worry is often action, so if economic fears are keeping you up at night, try to channel those feelings into concrete steps.

Preparing for stagflation is a bit like preparing for a recession. It’s about making sure you can handle an unexpected job loss and cope if prices increase as they did last year. Here are three steps to take.

1. Make a budget

If you don’t have a good idea of where your money goes each month, take some time in January to make a budget. It doesn’t have to be complicated, and there are budgeting apps that can help. What’s important is to understand what you spend in comparison to what you earn, and identify potential areas where you can cut back if necessary.

2. Prioritize your emergency fund

Having three to six months’ worth of living expenses tucked away in a savings account gives you a decent cushion against any economic craziness that might unfold. If you’re really worried, you might even aim to put more cash into your emergency fund.

Unfortunately, inflation has meant some Americans have dipped into their reserves to cover essentials this year. If that’s your position — or your emergency savings aren’t where you want them to be — don’t panic. Look at your budget and see if there’s anything non-essential you can cut to give you some extra cash.

If you can’t find any wiggle room in your spending, see if you can take on some extra hours at work or even get a side hustle. Right now the job market is relatively strong, which may make it an extra time to pick up additional work. Sometimes it’s easier to increase your income than cut your outgoings.

3. Pay down high-interest debt

The repayments on credit card or other high-interest debt can make a sizable dent in your budget each month. On top of which, you’ll have to pay interest on what you owe. This can get expensive, particularly with interest rates increasing.

It’s unlikely you’ll be able to pay off your debt overnight. But try to set achievable goals based on your financial situation. There are different ways to pay down debt, so look at what route would work best for you. Once you make a plan, find ways to celebrate when you reach milestones.

It isn’t an easy process. Try to remember that every step you take will make it easier to handle stagflation and strengthen your financial position. Even if the economy doesn’t worsen next year, paying off what you owe could improve your credit score and give you more disposable income for other expenses.

Bottom line

There are a lot of reasons to be concerned about what might happen to the economy in 2023, but nobody knows what will actually happen. If you focus on the things you can control, such as your budget and your bank account balance, you can’t go far wrong. The stronger your financial foundations are, the better positioned you’ll be for a recession or a period of stagflation.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

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Don’t pay for benefits you don’t want or need. 

Amazon is taking over the world. Not really. But maybe, sort of. Delivery trucks are everywhere, especially in urban areas. It’s not uncommon for a household to receive daily deliveries. Are they really getting their money’s worth?

7 reasons to drop Amazon Prime

Here are some compelling reasons to drop Amazon Prime in 2023 and give your bank account a break.

1. You love Earth

The amount of packaging required to bring multiple small orders to your home compared with one trip to a big store is huge. If you care that one billion trees are used every year to create packaging, consider buying less online from companies like Amazon.

2. You want to support local businesses

Retail giants like Amazon have changed the way America does business. Small, family-owned retail businesses can’t compete with the Amazons of the world. Your local shop has to charge more for almost everything, which can make it hard to stay in business. If you want to support small business owners, let the Amazon Prime membership go and shop local instead.

3. You don’t order often

Amazon Prime costs $139 per year, and the lowest shipping charge is $5.99. That’s potentially 23 orders before you break even if you don’t take advantage of other Prime benefits (unless you can consistently order enough to qualify for free shipping). If you don’t make that many orders, it might be easier on your credit card bill to let Prime go.

4. You don’t make small orders

Amazon waives shipping charges for orders over $25. So if you normally order a few things at a time, you probably won’t pay for shipping anyway.

5. You live near a hub

If you live anywhere near Amazon distribution points, and they are located all over, you’re probably going to get your orders within two to three days. This is especially true for urban areas where Amazon activity is high. So it’s possible that you’re paying $139 for “free” two-day shipping that you’d get anyway.

By the way, Amazon hardly has a perfect record when it comes to two-day shipping. So even if you pay for Prime, you might not get all of your orders in two days.

6. You have plenty of other video streaming options

Are you already paying for other streaming services? If so, Prime Video might not be a good reason to hang onto Prime. It’s true that every streaming service has access to a slightly different line-up of movies and TV shows. But unless you really do watch every streaming service’s exclusive programming all the time, it might be friendlier to your budget to subscribe sequentially instead of concurrently. Subscribe to Amazon Prime for a period of time and then switch to Netflix or Hulu or another streaming service.

7. Digital benefits are duplicated elsewhere in your life

Amazon Prime comes with unlimited photo and video storage. That’s great, but are you already backing up your photos to iCloud or Google? Even if you exceed the free storage limit, Google, for example, has plans starting at $20 per year.

Like other music streaming services, Amazon Music has limited capabilities unless you pay for upgraded premium service. If you have an Apple device, you can get Apple Music with similar features for half the annual cost.

5 reasons to keep Amazon Prime in 2023

Amazon Prime does make a lot of people happy, it’s true. You don’t have to use all of the benefits to make the membership fee worthwhile. Here are the main reasons you might want to keep Amazon Prime in the new year:

You order from Amazon frequently.You want the option to place small orders with free shipping.You live in a rural area where Amazon’s non-Prime free shipping takes a really long time.You will enjoy going all-in on Amazon’s digital benefits, like ad-free music and photo storage.You share benefits with family members and you want separate logins for everyone.

If you have Amazon Prime but you decide you want to cancel it, navigate to your account, click “Prime,” and then “Manage Membership.” Amazon Prime is a way of life for many people, but there’s no guarantee that it’ll make your life better. Consider your usage and choose for yourself.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Kimberly Rotter has positions in Amazon.com and Apple. The Motley Fool has positions in and recommends Alphabet, Amazon.com, Apple, and Netflix. The Motley Fool recommends the following options: long March 2023 $120 calls on Apple and short March 2023 $130 calls on Apple. The Motley Fool has a disclosure policy.

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